Balance sheets are one of the most important types of financial documents in business accounting. As you may know, they list all of a given business’s assets and liabilities. Assets are items of value — tangible or intangible items — that the business owns. Liabilities, on the other hand, are debt-related financial obligations.
When using Quickbooks to keep track of your business’s finances, though, you may encounter two types of accounts. Quickbooks offers balance sheet accounts as well as non-balance sheet accounts. What’s the difference between balance sheet accounts and non-balance sheet accounts exactly?
What Are Balance Sheet Accounts?
Balance sheet accounts are financial accounts that have their own register. Registers are designed for tracking purposes. When a financial account has its own register, you’ll be able to track it. All balance sheet accounts have their own register.
Some of the most common types of balance sheet accounts in Quickbooks include asset, liability, equity, accounts receivable and accounts payable. Each of these balance sheet accounts has its own register. You can track all of your business’s assets, for instance, by pulling up the asset balance sheet account. Alternatively, you can track all of your business’s accounts payable by pulling up the accounts payable balance sheet account.
What Are Non-Balance Sheet Accounts?
Non-balance sheet accounts, on the other hand, are financial accounts that do not have their own register. You can’t track them like balance sheet accounts. Rather, non-balance sheet accounts are general financial accounts. In Quickbooks, non-balance sheet accounts do not have their own register, which is how they differ from balance sheet accounts.
Examples of non-balance sheet accounts include income and expense. Income, of course, is money that your business earns from selling its products or services. Expenses, conversely, consists of money that your business pays — or debt that your business incurs — during its regular operations. Income and expense are both considered non-balance sheet accounts because they don’t have their own register.
Differences Between Balance Sheet and Non-Balance Sheet Accounts
Financial accounts can be classified as either balance sheet or non-balance sheet depending on whether they have their own register. Balance sheet accounts have their own register, whereas non-balance sheets don’t have their own register.
Most financial accounts are considered balance sheet accounts. With that said, there are still a few non-balance sheet accounts, including income and expense. By understanding how they differ, you’ll be able to take full advantage of the Quickbooks accounting software.
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